With the Reserve Bank of India (RBI) rejecting the plea for starting insolvency proceedings against debt-ridden JP Associates, lenders will take the ailing company to the National Company Law Tribunal (NCLT).
Bankers said ICICI Bank, lead lender for the ailing JP Associates, had approached the RBI to make an exception in this case as banks had already finalised a restructuring plan and also partly implemented it.
Given the Supreme Court directive in JP Infratech case, the RBI has preferred not to accede to the request. The process of divesting the cement business is almost through. The restructuring plan for real estate and engineering procurement construction (EPC) businesses may be reopened, they said.
While giving a verdict in the JP Infratech case, the Supreme Court allowed the application of the RBI to ask banks to initiate insolvency proceedings against Jaiprakash Associates under the Insolvency and Bankruptcy Code (IBC). The court also directed the transfer of Rs 7.50 billion that was deposited by Jaiprakash Associates to the NCLT.
Jaiprakash Associates, which is the flagship company of the crisis-hit Jaypee group, is into construction, cement, real estate, hospitality and power businesses. It is in talks for selling its cement business to reduce debt.
The Jaypee group is facing a huge crisis because of significant delay in completion of its real estate projects that forced buyers to approach courts seeking either flats or refund of their hard-earned money. It reported a standalone net loss of Rs 2.85 billion for the first quarter of this financial year. Its net profit stood at Rs 7.65 billion in the year-ago period, the company said in a regulatory filing.
Total income also declined to Rs 17 billion during the April-June period of 2018-19 fiscal from Rs 26.02 billion in the corresponding period of the previous year.
The company incurred exceptional expenses of Rs 1.92 billion towards entry tax liability in Uttar Pradesh.